Credit standing of customers put at risk by AIB error

ALLIED IRISH Banks has admitted to sending incorrect statements to the Irish Credit Bureau detailing missed loan repayments relating to about 12,000 customers over a six-year period up to July 2012.

The error on the customer arrears cases led to an incorrect report on the repayment history for each affected customer being submitted, the bank told the bureau in a letter on Tuesday.

In cases where customers missed a number of weekly or fortnightly repayments, AIB incorrectly reported the number of missed weekly or fortnight payments as opposed to the number of equivalent months overdue as required by the credit bureau.

Lenders use the bureau’s records to determine the creditworthiness of borrowers before deciding whether to lend to them.

More than 140 lending institutions, including banks, credit unions, credit card providers and local authorities, register information on their customer repayment records with the bureau.

AIB is investigating the impact of the error on a case-by-case basis to determine whether the affected customers have been put at a disadvantage in seeking new loans as a result of the incorrect reporting.

The bank apologised to the customers and promised to cover the expense of seeking a €6 report on each customer’s creditworthiness from the bureau, which could cost the lender up to €72,000 in total.

“All historical customer payment records currently held at the Irish Credit Bureau have been corrected for this error and system changes have been made at AIB to prevent a recurrence,” the bank said in a statement.

AIB executive Des Houlihan wrote to the credit bureau on Tuesday asking it to notify lenders who are members of the bureau as they may receive queries from the affected customers of the bank.

Fianna Fáil finance spokesman Michael McGrath TD said a “serious mistake” by AIB had led to the bureau holding incorrect information on file for up to 12,000 customers since 2006.

“This could potentially have affected credit decisions made by financial institutions relying on the accuracy of the information held by the ICB,” said Mr McGrath.

“In some cases, people may have been denied credit based on the details held on file by the ICB. In addition, people may well have paid for the details on their credit report and have been given incorrect information.”

Mr McGrath said customers should be aware that all records remained on the bureau’s database for five years, even after the loan had been repaid or account closed.

Customers needed to be reassured that other institutions had not made the same mistake, he said. He called on AIB and the bureau to make a statement providing more information on the effect of the error on customers.

The incorrect reporting of arrears is the latest in a litany of errors and overcharging cases at the bank, which was taken into State control after being bailed out with €21 billion of public money.

The bank said in April it was repaying €3.1 million to 11,500 customers over errors on insurance products sold with credit cards.

The Central Bank fined the bank €2 million, the largest ever imposed on a retail bank, in December 2010 for overcharging significant numbers of customers over a period of several years.

In February 2010 the bank admitted charging 40,000 customers incorrect fees and interest over several years due to an error discovered in November 2008.